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- N
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Fifth letter in a
NASDAQ stock symbol pertaining to the company's third class of preferred shares.
- N.A.S.D.
- See:
National Association of Securities Dealers
- N.A.S.D.A.Q.S.
- See:
National Association of Securities Dealers Automatic Quotation System
- N.A.V.
- See:
Net asset value
- N.F.A.
- See:
National Futures Association
- N.M.S.
- See:
National Market System
- N.I.F
- See:
Note issuance facility
- N.O.W.
- See:
Negotiable Order of Withdrawal
- N.P.V.
- See:
Net present value
- N.Y.S.E.
- See:
New York Stock Exchange
- Naive diversification
- A strategy whereby an
investor simply invests in a number of different
assets and hopes that the
variance of the
expected return on the
portfolio is lowered. In contrast, mathematical programing can be used to select the best possible investment weights. Related:
Markowitz diversification.
- Naked option strategies
- An unhedged strategy making exclusive use of one of the following:
Short
call strategy (selling or writing call options), and short put strategy (selling or writing
put options). By themselves, these
positions are called
naked strategies because they do not involve an
offsetting or risk-reducing
position in another
option or the
underlying security. Related:
covered option strategies. Antithesis of
covered option.
- Naked strategies
- When you write an
option without owning the
underlying asset. You are naked because often you agreed to sell something that you do not own.
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National Association of Securities Dealers (N.A.S.D.)
- Refers to over-the-counter trading. Nonprofit organization formed under the joint sponsorship of the
investment bankers' conference and the
S.E.C. to comply with the Maloney Act, which provided for the regulation of the
O.T.C. market.
-
National Association of Securities Dealers Automatic Quotation System (N.A.S.D.A.Q.)
- An electronic quotation system that provides price quotations to market participants about the more actively traded
common stock
issues in the
O.T.C. market. About 4,000
common stock
issues are included in the N.A.S.D.A.Q. system.
-
National Futures Association (N.F.A.)
- The
futures
industry self regulatory organization established in 1982.
- National market
- Related:
internal market
- National Market System (N.M.S.)
- Refers to over-the-counter trading. System of trading
O.T.C. stocks under the sponsorship of the
N.A.S.D.. Must meet certain criteria for size, profitability and trading activity. More comprehensive information is available for N.M.S. stocks than for non-N.M.S. stocks traded
O.T.C. (high, low, and last-sale
prices, cumulative volume figures, and
bid and
ask quotations throughout the day), due to the fact that
market-makers must report the actual price and number of
shares comprising each transaction within 90 seconds vs. non-real-time reporting for non-N.M.S. stocks (thus, last sale prices and minute-to-minute volume updates are not possible).
- Nationalization
- A government takeover of a private company.
- Natural
- Used in the context of general equities. Customer buyer or seller, versus a
principal or
profile interest.
Legitimate,
real.
- Natural logarithm
- Logarithm to the base e (approximately 2.7183).
- Nearby
- The nearest active
trading month of a financial or
commodity
futures market. Related:
deferred futures
- Nearby futures contract
- When several
futures contracts are considered, the
contract with the closest
settlement date is called the nearby futures contract. The next (or the "next out")
futures contract is the one that settles just after the nearby futures contract. The
contract farthest away in time from settlement is called the
most distant futures contract.
- "Need the tick"
- Used for listed equity securities. "Need the
stock to
trade up/down at least one
tick (1/8) in order to comply with such regulations as those governing
short sales/corporate repurchases."
- Negative amortization
- A
loan repayment schedule in which the
outstanding
principal balance of the loan increases, rather than
amortizing, because the scheduled monthly payments do not cover the full amount required to amortize the loan. The unpaid
interest is added to the
outstanding
principal, to be repaid later.
- Negative carry
- Related:
net financing cost
- Negative convexity
- A
bond characteristic such that the price appreciation will be less than the price
depreciation for a large change in
yield of a given number of
basis points. For example, a fixed rate mortgage may lose value as rates go down because of prepayments.
- Negative covenant
- A
bond covenant that limits or prohibits altogether certain actions unless the
bondholders agree.
- Negative duration
- A situation in which the price of the
M.B.S. moves in the
same direction as
interest rates.
- Negative pledge clause
- A
bond covenant that requires the
borrower to grant
lenders a
lien equivalent to any liens that may be granted in the future to any other currently unsecured lenders.
- Neglected firm effect
- The tendency of firms that are neglected by
security analysts to outperform firms that are the subject of considerable attention.
-
Negotiated certificate of deposit
- A large-denomination
C.D., generally $1MM or more, that can be sold but cannot be cashed in before
maturity.
- Negotiated markets
-
Markets in which each transaction is separately negotiated between buyer and seller (i.e. an
investor and a
dealer).
- Negotiated offering
- An
offering of
securities for which the terms, including
underwriters' compensation, have been negotiated between the
issuer and the
underwriters.
- Negotiated sale
- Situation in which the terms of an
offering are determined by negotiation between the
issuer and the
underwriter rather than through competitive bidding by underwriting groups.
-
Negotiable order of withdrawal (N.O.W.)
-
Demand deposits that pay
interest.
- Net adjusted present value
- The adjusted
present value minus the initial cost of an investment.
- Net advantage of refunding
- The
net present value of the savings from a
refunding.
- Net advantage to leasing
- The
net present value of entering into a
lease financing arrangement rather than
borrowing the necessary funds and buying the
asset.
- Net advantage to merging
- The difference in total post- and pre-merger
market value minus the cost of the
merger.
- Net asset value (N.A.V.)
- The value of a fund's investments. For a
mutual fund, the net asset value per
share usually represents the fund's
market price, subject to a possible sales or
redemption charge. For a
closed end fund, the market price may vary significantly from the net asset value.
- Net assets
- The difference between total
assets on the one hand and
current liabilities and noncapitalized long-term
liabilities on the other hand.
-
Net benefit to leverage factor
- A linear approximation of a
factor, that enables one to operationalize the total impact of
leverage on firm value in the
capital market imperfections view of
capital structure.
- Net book value
- The current
book value of an
asset or
liability; that is, its original book value net of any accounting adjustments such as
depreciation.
- Net cash balance
- Beginning
cash balance plus cash receipts minus cash disbursements.
- Net change
- This is the difference between a day's last
trade and the previous day's last trade.
- Net errors and omissions
- In
balance of payments accounting, net errors and omissions record the statistical discrepancies that arise in gathering balance of payments data.
- Net financing cost
- Also called the
cost of carry or, simply,
carry, the difference between the cost of financing the purchase of an
asset and the asset's cash
yield. Positive carry means that the
yield earned is greater than the financing cost; negative carry means that the financing cost exceeds the yield earned.
- Net float
- Sum of
disbursement float and
collection float.
- Net income
- The company's total
earnings, reflecting revenues adjusted for costs of doing business,
depreciation,
interest, taxes and other expenses.
- Net investment
- Gross, or total,
investment minus
depreciation.
- Net lease
- A
lease arrangement under which the
lessee is responsible for all property taxes, maintenance expenses, insurance, and other costs associated with keeping the
asset in good working condition.
- Net operating losses
- Losses that a firm can take advantage of to reduce taxes.
- Net operating margin
- The ratio of net operating income to net sales.
- Net parity
- Antithesis of
gross parity.
Convertibles: price of a convertible security including
accrued interest
International: price of international
security including commissions, fees, stamp duty and other transaction costs, translated into U.S. dollar amounts.
- Net period
- The period of time between the end of the
discount period and the date payment is due.
- Net position
- The value of the
position subtracting out the initial cost of setting up the position. For example, if 100
options where purchased for $1 each and the option is currently
trading for $9 then the value of the net position is $900 - $100 = $800.
- Net present value (N.P.V.)
- The
present value of the expected future
cash flows minus the cost.
-
Net present value of growth opportunities
- A model valuing a firm in which
net present value of new investment opportunities is explicitly examined.
-
Net present value of future investments
- The
present value of the total sum of
N.P.V.s expected to result from all of the firm's future investments.
- Net present value rule
- An investment is worth making if it has a positive
N.P.V. Projects with negative N.P.V.s should be rejected.
- Net profit margin
-
Net income divided by sales; the amount of each sales dollar left over after all expenses have been paid.
- Net sales transaction
- Refers to
over-the-counter trading.
Securities transaction where the quoted prices include
commissions (i.e.,
O.T.C.); looked at another way, the buyer and seller do not pay fees or
commissions in addition to the print or
quotation prices.
- Net salvage value
- The after-tax net
cash flow for terminating the project.
- Net working capital
-
Current assets minus
current liabilities. Often simply referred to as
working capital.
- Net worth
-
Common
stockholders' equity which consists of
common stock, surplus, and
retained earnings.
- Netting
- Reducing transfers of funds between
subsidiaries or separate companies to a net amount.
- Netting out
- To get or bring in as a net; to clear as
profit.
- Neutral hedge
-
Hedge which is expected to
yield a dollar-neutral result of the combined
position regardless of price change in any part of the hedge
securities. For any convertible
trading at a premium, this ratio is less than 100%. The higher the convertible premium, the lower a ratio must be to be neutral. See:
delta.
- Neutral period
- In the
Euromarket, a period over which
Eurodollars are sold is said to be neutral if it does not start or end on either a Friday or the day before a holiday.
- New York Stock Exchange (N.Y.S.E.)
- Also known as the
Big Board or The
Exchange. N.Y.S.E. composite index. Composite index covering price movements of all new world
common stocks listed on the New York Stock Exchange. It is based on the close of the market on December 31, 1965 at a level of 50.00, and is weighted according to the number of shares listed for each
issue. Print changes in the index are converted to dollars and cents so as to provide a meaningful measure of changes in the average price of
listed stocks. The composite index is supplemented by separate indices for four industry groups: industrial, transportation, utility, and finance.
- New-issues market
- The
market in which a new
issue of
securities is first sold to investors.
- New money
- In a
Treasury
auction, the amount by which the
par value of the
securities
offered exceeds that of those
maturing.
- "News out"
- Refers to over-the-counter trading. A news story concerning the
stock being considered has recently been posted on one of the news services, such as the
Dow Jones news service or
Reuters. A courtesy standard in
trading is to mention that "news is out", in case the other party is unaware of the new development.
- Next day settlement
- Transaction in which the
contract is settled the day after the
trade is
executed. See:
settlement date.
- Next futures contract
- The
contract settling immediately after the
nearby futures contract.
- Nexus (of contracts)
- A set or collection of something.
- Nikkei stock average
- Mainly applies to international equities. Price-weighted average of 225 stocks of the first section of the Tokyo Stock Exchange started on May 16, 1949. Japanese equivalent of the U.S.'s
Dow.
- "No Autex"
- Used in the context of general equities. "No buy or sell interest should be entered into the
Autex (advertising) system." Due to the fear that exposure of their inquiry will negatively affect the price at which they hope to ultimately transact the
trade, hence disturbing the customer's picture.
- No book
- Used for listed equity securities. Not much, if any,
stock is being
bid for or
offered at the present time by customers nor the
specialist.
- NM
- Abbreviation for Not Meaningful.
- No load mutual fund
- An
open-end investment company,
shares of which are sold without a
sales charge. There can be other
distribution charges, however, such as Article
12B-1
fees. A true "no load" fund will have neither a sales charge
nor a distribution fee.
- Noise
-
Price and
volume fluctuations that can confuse interpretation of market direction. Used in the context of general equities.
Stock market activity caused by
program trades,
dividend rolls, and other phenomena not reflective of general sentiment. Antithesis of
real.
- No-load fund
- A
mutual fund that does not impose a sales
commission. Related:
load fund,
no load mutual fund
- Nominal
- In name only. Differences in
compounding cause the nominal rate to differ from the
effective interest rate.
Inflation causes the
purchasing power of money to differ from one time to another.
- Nominal annual rate
- An
effective rate per period multiplied by the number of periods in a year. Same as
annual percentage rate.
- Nominal cash flow
- A
cash flow expressed in
nominal terms if the actual dollars to be received or paid out are given.
- Nominal exchange rate
- The actual
foreign exchange
quotation in contrast to the
real
exchange rate that has been adjusted for changes in
purchasing power.
- Nominal interest rate
- The
interest rate unadjusted for
inflation.
- Nominal price
- Price
quotations on
futures for a period in which no actual
trading took place.
- Nominal quotation
- Used in the context of general equities.
Bid and
offer prices given by a
market-maker for the purpose of valuation, not as an invitation to trade; must be specifically identified as such by prefixing the quotes F.Y.I. (for your information) or F.V.O. (for valuation only).
- Non-cumulative
- Mainly applies to convertible securities. Type of
preferred stock on which unpaid
dividends do not
accrue. Omitted dividends are, as a rule, gone forever.
-
Non-cumulative preferred stock
-
Preferred stock whose holders must forgo
dividend payments when the company misses a dividend payment. Related:
Cumulative preferred stock
- Non-financial services
- Include such things as freight, insurance, passenger services, and travel.
- Non-insured plans
- Defined benefit pension plans that are not guaranteed by life insurance products. Related:
insured plans
- Nonmember firm
- Used for listed equity securities. Brokerage firm that is not a member of an organized exchange (N.Y.S.E.). Such firms
execute their
trades either through member firms, on
regional exchanges where they are members, or in the third market.
-
Non-parallel shift in the yield curve
- A shift in the
yield curve in which
yields do not change by the same number of
basis points for every
maturity. Related:
Parallel shift in the yield curve.
- Non-reproducible assets
- A
tangible asset with unique physical properties, like a parcel of land, a mine, or a work of art.
- Non-tradables
- Refer to goods and services produced and consumed domestically that are not close substitutes to import or export goods and services.
- Noncash charge
- A cost, such as
depreciation, depletion, and
amortization, that does not involve any cash outflow.
- Noncompetitive bid
- In a
Treasury
auction,
bidding for a specific amount of
securities at the price, whatever it may turn out to be, equal to the average price of the accepted competitive bids.
-
Nondiversifiability of human capital
- The difficulty of
diversifying one's human capital (the unique capabilities and expertise of individuals) and employment effort.
- Nondiversifiable risk
-
Risk that cannot be eliminated by
diversification.
- Nonmarketed claims
- Claims that cannot be easily bought and sold in the financial markets, such as those of the government and litigants in lawsuits.
- Nonrecourse
- Without recourse, as in a non-recourse
lease.
- Nonredeemable
- Not permitted, under the terms of
indenture, to be redeemed.
- Nonrefundable
- Not permitted, under the terms of
indenture, to be refundable.
- Nonsystematic risk
- Nonmarket or
firm-specific risk factors that can be eliminated by
diversification. Also called
unique risk or
diversifiable risk.
Systematic risk refers to risk factors common to the entire economy.
- Normal annuity form
- The manner in which retirement benefits are paid out.
- Normal backwardation theory
- Holds that the
futures price will be
bid down to a level below the expected
spot price.
- Normal deviate
- Related:
standardized value
-
Normal probability distribution
- A
probability distribution for a continuous
random variable that is forms a symmetrical bell-shaped curve around the mean. This distribution has no
skewness or
excess kurtosis.
- Normal portfolio
- A customized
benchmark that includes all the
securities from which a manager normally chooses, weighted as the manager would weight them in a
portfolio.
- Normal random variable
- A
random variable that has a
normal probability distribution.
- Normalizing method
- The practice of making a change in the income account equivalent to the tax savings realized through the use of different
depreciation methods for
shareholder and income tax purposes, thus washing out the benefits of the tax savings reported as final
net income to shareholders.
- Not a name with us
- Refers to over-the-counter trading. Not a registered
market-maker in the
security, especially in
O.T.C. and convertibles, or having nothing
real to do.
- Note
-
Debt
instruments with initial
maturities greater than one year and less than 10 years.
- Note agreement
- A
contract for
privately placed
debt.
- Note issuance facility (N.I.F.)
- An agreement by which a
syndicate of banks indicates a willingness to accept short-term
notes from
borrowers and resell these
notes in the
Eurocurrency markets.
-
Notes to the financial statements
- A detailed set of
notes immediately following the financial statements in an
annual report that explain and expand on the information in the financial statements.
- Not held order (N.H. order)
- Mainly applies to international equities. Market or
limit order in which the customer does not desire to transact automatically at the
inside market (market held) but instead has given the
trader or
floor broker (listed stock) time and price discretion in
executing on a best efforts basis and will not hold the broker responsible if he misses the print within his limits (limit not held) or obtains a worse price (market not held). The order is marked "not held, disregard tape/D.R.T., take time" or bears any such qualifying notation, excluding "or better". See:
held order.
- Notice day
- A day on which notices of intent to
deliver pertaining to a specified
delivery month may be
issued. Related:
delivery notice.
- Notification date
- The day the
option is either
exercised or
expires.
- Notional principal amount
- In an
interest rate
swap, the predetermined dollar
principal on which the exchanged
interest payments are based.
- Novation
-
Defeasance whereby the firm's
debt is
canceled.
- NPV profile
- A graph of
N.P.V. as a function of the
discount rate.
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